Emeco Industries, Inc. v. United States

• Decision Date: 17 October 1973
• Docket Number: No. 547-71.,547-71.
• Citation: 485 F.2d 652
• Parties: EMECO INDUSTRIES, INC. v. The UNITED STATES.
• Court: U.S. Claims Court

485 F.2d 652 (1973)

EMECO INDUSTRIES, INC. v. The UNITED STATES.

No. 547-71.

United States Court of Claims.

October 17, 1973.

Alexander M. Heron, Washington, D.C., atty. of record, for plaintiff. Murray S. Simpson, Jr., Pope, Ballard & Loos, Washington, D.C., of counsel.

Russell W. Koskinen, Washington, D.C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant.

Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA and BENNETT, Judges.

OPINION

PER CURIAM:

This case comes before the court on plaintiff's motion, filed August 23, 1973, for judgment and for adoption of the recommended decision filed May 30, 1973, by Trial Judge Joseph V. Colaianni pursuant to Rule 134(h), defendant having withdrawn its previously filed notice of intention to except to said decision. Upon consideration thereof, without oral argument since the court agrees with the Trial Judge's decision, as hereinafter set forth,^* it hereby affirms and adopts the same as the basis for its judgment in this case. Therefore, plaintiff is entitled to recover and judgment is entered for plaintiff with the amount of recovery to be determined pursuant to Rule 131(c).

OPINION OF TRIAL JUDGE

COLAIANNI, Trial Judge:

The claim in this case arises from a September 24, 1969, solicitation from defendant, acting through the Federal Supply Service of its General Services Administration, hereinafter referred to as "GSA," for the manufacture of 31,896 index card boxes. The solicitation indicated that the boxes were to be delivered in varying specified quantities to 1,500 addresses, and bids were requested F.O.B. destination.

Following the bid opening, defendant on October 16, 1969, requested a plant inspection report to determine if plaintiff's facilities were capable of producing the entire 31,896 boxes within the time specified by the solicitation. The inspection was completed on October 24, 1969, and the report indicated that plaintiff was capable of performing the contract within the 70 days required by the contract, notwithstanding that plaintiff had never manufactured index card boxes before. The report further noted that plaintiff had made arrangements to purchase four dies, at a total cost of $10,300, which were essential in order for it to manufacture the boxes. The dies were to be delivered within 30 days after defendant had approved plaintiff's preproduction sample.

In the meantime, although unknown to plaintiff, defendant on October 17, 1969, received a late bid from Art Steel Company, Inc. On October 22, 1969, following an investigation, defendant's contracting officer concluded that the late receipt of Art Steel's bid was due solely to a delay in the mail and that the bid should therefore be considered for award. Art Steel offered to build boxes to defendant's specifications at a price of $2.78 each, but limited its bid by the following clause, to only 29,183 boxes:

Bidding on quantity less than specified, in accordance with provision contained in paragraph 10C of Standard Form 33A. Bid covers all quantities specified except 2,713 boxes for Navy requirements * * *.

The fact that Art Steel's offer to manufacture and ship 29,183 boxes was low was not communicated to plaintiff or any of the other six bidders whose offers had been opened on October 14, 1969.

Further, although the date of its occurrence is not established in the record, there is no doubt that the contracting officer signed plaintiff's offer to supply the entire quantity of boxes. Equally well established, however, is the fact that the signed contract was never delivered to plaintiff. The record also indicates that defendant originally intended to award the entire contract to a single bidder. However, following the receipt of Art Steel's late bid, the contracting officer apparently decided that it would be in the best interest of the Government to split the award between plaintiff and Art Steel. The offerors whose bids had been opened on October 14, 1969, were not told of defendant's intention to split the award.

Plaintiff on December 8, 1969, received defendant's December 3, 1969, purchase order for 2,713 boxes, representing the entire requirement of the Navy, at a total price of $8,247.52. The 2,713 boxes were to be shipped to 1,355 of the contract's 1,500 destinations. Immediately upon receipt of the purchase order, plaintiff set about to manufacture a preproduction sample by hand. After receiving defendant's approval of its preproduction sample, plaintiff began placing orders for the necessary dies. The dies and other necessary tooling were on hand by February 1970. Plaintiff had also, by December 16, 1969, begun to place orders for the necessary material for the production of the entire quantity of 31,896 boxes, and by February 23, 1970, all of the necessary material had been ordered.

Plaintiff began producing boxes on February 4, 1970. The 2,713 boxes covered by the December 3, 1969, purchase order were completed and delivered to the specified destinations within the agreed time. Plaintiff, however, did not discontinue production upon completion of the 2,713 boxes. Plaintiff, apparently with an eye towards manufacturing all of the 31,896 boxes called for by defendant's original solicitation, instead continued with the production of the remaining number of boxes.

During early March of 1970, while checking a delivery requirement with the Department of Defense, plaintiff accidentally, and for the first time, learned that defendant had placed an order for the remaining 29,183 boxes with Art Steel Company, Inc. Plaintiff immediately stopped its production process, but by this time it had already completed some 6,000 boxes over the 2,713 required by defendant's purchase order. In addition, plaintiff wrote a letter of protest to the defendant.

In an exchange of letters that followed, plaintiff learned of Art Steel's late bid to manufacture 29,183 boxes for delivery to the 145 destinations at a price of $2.78 each. Plaintiff was further advised that Art Steel's bid was determined to have been timely, since the delay in its arrival was found to be the fault of the Post Office. Defendant further advised plaintiff that Art Steel's bid, although not directed to the entire quantity of boxes stated in the solicitation, was still felt to be responsive since a partial bid was authorized by article 10(c) of the instructions that accompanied the solicitation. Defendant went on to admit that it had originally intended to award the entire contract at a single price to a single bidder, but that upon reflection it was felt to be in the Government's best interest to resort to a split award between plaintiff and Art Steel. After failing to resolve the matter on an informal basis, plaintiff filed suit in this court on July 19, 1971.

The questions which must be resolved are whether plaintiff was justified under the circumstances of this case in incurring expenses which would only have been required and necessary if it had been awarded a contract for manufacturing the entire quantity of boxes covered by defendant's solicitation, and, if it was, what is it entitled to recover?

I. Solicitation did not Preclude Split Awards

Plaintiff, in the main, argues that the solicitation as written was intended to obligate defendant to purchase the entire quantity of 31,896 boxes from a single source. Building on that theme, plaintiff argues that the solicitation was for a definite quantity and that a split award was therefore not permitted. In support of its position, plaintiff initially points to the schedule section of the solicitation which contains the following notation under the "Supplies/Services" column:

Definite Quantity Contract for FSC Class 7520 — Box, Index Card

In addition, plaintiff argues that the continuation page of the solicitation was set up to require a single bid on the definite quantity of 31,896 boxes. Plaintiff further contends that defendant, by its own admission, intended to award the contract to a single bidder.

Finally, plaintiff argues that if the contract can be construed to permit partial awards to more than one source, it is ambiguous and defendant, as author of the contract, should suffer the consequences.

Defendant argues that the intention to award the contract to a single bidder does not appear in the solicitation, and that in any event —

* * * in view of the fact that Art Steel\'s bid was responsive and low, the contracting officer had no choice except to make the award to Art Steel up to the limitation specified in * * * Art Steel\'s bid, as well as the * * * award to plaintiff for the balance of the quantity.

Defendant further contends that article 10(c) of the solicitation was designed to permit a bidder to place limitations on the quantities bid, and to reserve to the Government the right to make awards on such a basis unless the bidder otherwise specified in its bid.

A careful reading of article 10(c) supports defendant's position. In the first place, the article clearly allows the Government to —

* * * accept any item or group of items of any offer, unless the offeror qualifies his offer by specific limitations.

Plaintiff placed no limitations on its bid. Going on, the article further provides that the —

* * * Government reserves the right to make an award on any item for a quantity less than the quantity offered at the unit prices offered unless the offeror specifies otherwise in his offer.

Again plaintiff placed no conditions on its bid, and in the light of this defendant made an award to plaintiff for 2,713 boxes instead of the entire quantity of 31,896. Furthermore, plaintiff's argument that article 42, entitled "All or None" bids of the GSA supplemental provisions, prevented it from limiting its bid to an "all or none" offer, is incorrect. That article clearly was intended to limit the use of an "all or none" bid in requirements and indefinite quantity contracts. Since the solicitation in question is entitled a definite...